Monthly Archives: December 2013

Like 2013 before it, 2014 is going to be a watershed year for the compliance and investor relations practices. Our 2013 Predictions were so spot-on, we have used our industry insiderish to analyze the current trends’ impact on 2014.

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In disappointment over the continued lack of social media enthusiasm by investor relations departments, the SEC has expanded their April 2, 2013 RegFD re-guidance to include bathroom mirror selfies. “Now that the selfie has passed the bar at the Oxford Dictionaries as Word of The Year, we felt it follows that the SEC accept the full frontal transparency that the technology delivers,” said @HotSECStaffer3468.

To show solidity toward the plight of corporate issuers’ burden of XBRL filing, The House of Representatives have put forth a bill requiring that all SEC staffers submit their travel expenses in XBRL.

House hearings on the 2013 Flash Crash finally conclude. The 976 page report recommends new mandates for electronic exchanges. By 2016: their restrooms must have Ground Fault Circuit outlets, all computers utilized for Trade Execution (SIP) must run McAfee Home Security Scan every Sunday night and should an outage repeat, complete and immediate transparency is required including “Opps…My bad!” being displayed throughout Times Square.

In rebuttal to Martin Scorsese’s scathing portrayal of traders in “The Wolf of Wall Street,” Mr. Scorsese’s financial advisors have moved his entire portfolio into Chinese reverse mergers and his bank keeps changing his ATM PIN without telling him.

The JOBS Act lifted ban on General Solicitation has created several new cable shopping channels, all offering “bargain deals” and “three easy payments.” To assure strict adherence to the accredited investor restrictions, cable fees will be increased to $17,000 per month (w/o HBO). Bad Actors remain the mainstay of daytime soaps.

Motivated by the high, spirited attendance of the NIRI 2014 Annual Conference in Las Vegas, all regional NIRI Chapters have moved their monthly meetings to church bingo halls.

The 2014 Blu-ray Special Edition of Ghostbustersis released including a lost blooper and out-take section. The public relations industry is rocked to hear (Bill Murry character) Peter Venkman’s original prophecy: “Human sacrifice, dogs and cats living together, the end of traditional press releases… mass hysteria!”

On behalf of the IR and Compliance group at Vintage Filings and PR Newswire, best wishes for a Happy Holiday and for a 2014 filled with success and laughter!

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Nice round of public relations ABOUT public relations last week surrounding the new album launch by Beyonce’. (do we even call them “albums” anymore?)

The first round of pundit discussion was how she side-stepped the music industry’s traditional marketing engines and self-released her 14 new songs and 17 new videos. No media tours or pre-emptive marketing work ie: Entertainment Tonight exclusive premiere. No artist in the music industry has ever released an entire album in this manner. Did it work? 828,773 downloads in one week, a new record for iTunes sales.

Ta-da! Simultaneous!

To repeat, there was no pre-emptive outreach. What she did use was the online simultaneous channels of social media and… a press release.

Why was a tried-and-true press release in her communications mosaic?

PR Newswire’s Shannon Ramlochan explains:

“Journalists and fans alike could not rely on speculation from the internet as a credible source. However, the press release was able to definitively answer burning questions such as why Beyoncé chose a groundbreaking visual approach to her album and explains how her team was able to accomplish such an extraordinary feat in the public eye.”

To repeat, Beyonce’ did not tell any media that she was releasing an album. There was no selective disclosure (now you see where this is going…) She timed her 1.) “new school” communications of social media along with her 2.) brand (corporate) website and 3.) with an “old school” press release. The press release both cemented the material facts and made sure all news channels were reached simultaneously. (boy, that sounds familiar) Obviously, she was not concerned about RegFD: she did require simultaneous fair disclose as the album’s ninja-like “Ta-da” launch – an essential element of the album’s release. It was an earnings surprise that exceed analysts expectations.

I don’t need to convince Investor Relations on the value of a press release:

Broad, non-exclusive distribution

Verified, time-stamped content

Uneditable, undelete-able disclosure

Easy-to-execute

What Beyonce demonstrated is an excellent use of the stakeholders communications mosaic and the importance of a balanced strategy even if you’re a megacap Fly Girl.

What can IR do?

Reverse her model. Ease social media SAFELY into your mosaic. Bring a full-channel communications balance to your newsflow. Click here to downloadthe whitepaper titled “How-to Automatically and Hands-free Send News Over Social Media.” This whitepaper has a tactical map that mitigates RegFD risk for Twitter and StockTwits.

Oh. Take a wild guess which newswire gave Beyonce’ the bootylious new reach she needed to break the new sales record?

This fact is very significant in context to the over-generalized “no respect” that reverse mergers carry. Admittedly, the flood of Chinese companies in 2011 (and their subsequent delistings) as well as deceitful shareholders who are anxious to “dump” their “shell” stock does nothing to boost confidence in reverse merger companies. Even the SEC sent an investor alert cautioning investors about reverse mergers, stating that they may be prone to fraud and other abuses.

But this over-generalization can be EASY foiled by investors doing what they should always do: diligence. It’s not the process… it’s the people.

How a reverse merger works:

Existing Public Company A creates wholly-owned Subsidiary B

Stockholders of acquiring Private Company C negotiate with the shareholders of Public Company A in to merge with Subsidiary B

Private Company C merges into Subsidiary B, with the Public Company A surviving and shares issued to shareholders of Private Company C

Private Company C becomes a wholly-owned subsidiary of the Public Company A with the controlling stockholders of Private Company C usually owning 90% or more of the Public Company A and Public Company A ‘s shareholders owning the remainder

Private Company C’s management team becomes the directors and officers of the public company

How a reverse merger works visually:

Currently public company...

creates a subsidiary.

Private company makes an offer to merge with
the subsidiary....

Which it does...

...creating a new public company organization lead by
the management team from the private company.

Ta-da! This entire process involves SEC filings Schedule 14f-1 (10 days prior to closing) and a “Super” Form 8-K (with full audited financials) due within 4 days of closing. Plus, since the issues that came clear from the Chinese companies’ “mis-steps,” both the NASDAQ and NYSE have put higher controls in place regarding reverse mergers.

Reverse mergers are a transparent and expedited path to becoming public. At no time should it be considered “quick & easy.”

An interesting area to us (…who execute the S-1 drafting session) is the research regarding the JOBS Act confidential filing for Emerging Growth Companies (EGC) provision. Recently, this confidential filing process came under some fire from pundits when Twitter announced that this was the manner in which they were going to file. “What are they hiding” was the discussion climate. Our view is blogged here – we positioned the Confidential IPO as a “Cautious IPO.”

One point that the PwC study offers to reinforce that “cautious” viewpoint is the average timeframe of an IPO… from initial S-1 (traditional or confidential) to ringing the bell is eight months. That’s eight months of opening your kimono to every one of your competitors. For a technology company (especially web-based), months are like dog years… and a savvy competitor can catch up very quickly.

A confidential IPO filing review with the SEC is the same as a traditional IPO:

What investors need to be mindful of is that the SEC review process for all IPOs is the same. It can become quite a game of ping-pong – and judging by the recent increase in SEC fraud “arrests,” the SEC is diving deeper and deeper into filings to protect investors.

What is the S-1 workflow?Please click here to download our whitepaper on the S-1 filing process. It’s a very tactical explanation.

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